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Explaining the Variations in the Magnitude of Undeclared Work Across the 28 European Union Member States

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  • Colin C. Williams

    (The University of Sheffield - Management School)

Abstract

This paper evaluates the competing theories that seek to explain the greater magnitude of undeclared work in some nations than others. These theories variously explain the higher levels of undeclared work in some nations to be determined by either economic under-development and the lack of modern governance ("modernisation" theory), higher taxes and state over-interference ("neo-liberal" theory) or inadequate government intervention in work and welfare ("political economy" theory). Reporting data on the magnitude of undeclared work in the 28 member states of the European Union using the labour input method, the finding is that undeclared work is higher in EU member states with lower levels of GDP per capita, less modernised systems of government, higher levels of corruption, social transfers are less effective at reducing poverty, and there are lower levels of public expenditure on labour market interventions to protect vulnerable groups. The theoretical and policy implications are then discussed.

Suggested Citation

  • Colin C. Williams, 2020. "Explaining the Variations in the Magnitude of Undeclared Work Across the 28 European Union Member States," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 203-223, June.
    • Handle: RePEc:nwe:eajour:y:2020:i:2:p:203-223
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    File URL: https://www.unwe.bg/doi/eajournal/2020.2/EA.2020.2.01.pdf
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    References listed on IDEAS

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    1. Andreas Buehn & Friedrich Schneider, 2012. "Shadow economies around the world: novel insights, accepted knowledge, and new estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 139-171, February.
    2. Nicholas Charron & Lewis Dijkstra & Victor Lapuente, 2015. "Erratum to: Mapping the Regional Divide in Europe: A Measure for Assessing Quality of Government in 206 European Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(3), pages 1059-1059, December.
    3. Axel Dreher & Friedrich Schneider, 2010. "Corruption and the shadow economy: an empirical analysis," Public Choice, Springer, vol. 144(1), pages 215-238, July.
    4. Dotti Nicola Francesco & Van Heur Bas & Williams Colin C., 2015. "Mapping the Shadow Economy: Spatial Variations in the use of High Denomination Bank Notes in Brussels," European Spatial Research and Policy, Sciendo, vol. 22(1), pages 5-21, June.
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    Cited by:

    1. Colin C Williams, 2021. "Tackling Undeclared Self-Employment in South-East Europe: from Deterrents to Preventative Policy Measures," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 280-298, July.
    2. Ioana Alexandra Horodnic & Colin C. Williams & Oana Țugulea & Iuliana Claudia Stoian Bobâlcă, 2022. "Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania," Sustainability, MDPI, vol. 14(12), pages 1-16, June.
    3. Marek Kośny & Jakub Sawulski & Aneta Kiełczewska, 2024. "Measuring the scale of envelope wages: Evidence from Poland," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(3), pages 949-970, July.

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    More about this item

    Keywords

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    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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